Does Heavy-Handed Internet Regulation Help Small Businesses and Women-Owned Firms?

By at 12 May, 2017, 9:10 am

By Karen Kerrigan-

On May 8th, fourteen female United States Senators signed a letter addressed to Federal Communication Commission (FCC) Chairman Ajit Pai that essentially expressed opposition to his announcement to reform excessive regulations on broadband service and the internet. They claim Chairman Pai’s initiative would have a negative impact on women-owned businesses across the nation. The assertion makes no sense.

The new “Title II’ internet rules are hurting small competitors in the industry and investment; by extension this harms small businesses including women-owned businesses. Indeed, these rules undermine broadband deployment and access to affordable broadband service, which undermines entrepreneurship and opportunity for America.

Light-Touch Rules Fostered Innovation, Growth and Opportunity

American small businesses and innovation thrive when there is “light-touch” – not heavy-handed – government regulation. This most certainly has been the case with the internet. No one can argue with the results: long-time bipartisan support for limited internet regulation has led to previously unimaginable innovation and gains for our economy and small businesses.

But now, 1930s-style “Title II” regulation of the internet hinders innovation and opportunity for businesses across-the-board.

As noted by the Senators’ letter: “Between 2007 and 2016, while the total number of firms increased by 9 percent, the number of women-owned firms increased by 45 percent – meaning that over this period the number of women-owned firms grew at a rate of fully five times the national average. This growth mirrors the emergence of the growth of the Internet as a platform for economic growth.”

Exactly. The Senators’ letter actually makes the point that growth and opportunity occurred during the period when light-touch regulation ruled the day. Why, now, undermine this growth through regulation that hurts investment, innovation and entrepreneurship?

Open and Transparent Process Important for Entrepreneurs

In their letter, the Senators write that the process for advancing the internet rules included a “lengthy notice and comment period.”  Indeed, their description of the process as “lengthy” may be accurate, but it was hardly transparent and inclusive.  The process was very secretive, and the public was not allowed to view the final plan – except for a few special-interest insiders – prior to the commission’s vote.

During the rulemaking period, the voice and concerns of small businesses were ignored and dismissed.  But thankfully this type of secretive and closed process is changing, as Chairman Pai has promised that transparency and inclusiveness will drive the regulatory process under his watch. (See an April 2015 blog post: Outsized Regulation (Always) Slams the Little Guy, which documents how the FCC ignored the small business community’s concerns about internet regulation.)

Chairman Pai’s work to restore of a light-touch framework will encourage investment in domestic broadband, which will positively impact jobs, innovation, and new business creation. In fact, according to the Free State Foundation, Obama-era internet regulations have cost the U.S. $5.1 billion in broadband capital investment.

As SBE Council noted a few months after the regulations went into effect:

Increased regulation always comes with increased costs. When elected officials and/or their appointees ignore this reality, entrepreneurship, business, employment, innovation and investment suffer, as do, ultimately, consumers as well.

And as SBE Council has emphasized, small businesses certainly suffer from the negative impact of regulation, including this gross regulatory overreach by the FCC. Consider, for example, that among firms within the telecommunications sector, 83 percent have fewer than 20 workers and 98 percent less than 500 employees. In addition, lost investment hurts small businesses as content providers in many industries, and enterprises across industries that reach new customers and markets via the Internet, and of course, as consumers of goods and services online.

Finally, as I noted at an event with Chairman Pai last month:

“What Chairman Pai and Commissioner O’Reilly are doing on the regulatory front matters to small business and the future of entrepreneurship in America. Investment is key to innovation and bringing our small businesses and people who want to start businesses affordable, high-quality broadband so they can use the tools of the Internet to start, scale, and compete in the global marketplace in the location of their choice.”

Again, we applaud the FCC for taking steps to reduce the excessive Obama-era rules on the internet. Doing so and restoring a light-touch framework will foster a competitive and creative internet ecosystem for all, including women-owned businesses. Encouraging broadband investment is a critical piece of the entrepreneurial ecosystem, which will give women entrepreneurs access to cutting-edge tools, access to markets and access to new ways to raise capital, which will help them start their businesses successfully, scale more effectively, and compete in today’s challenging marketplace. This type of opportunity and dynamic innovation is something everyone should be able to get behind.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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